The Internet abounds with brokers and sellers who encourage traders to trade in the day and provides reliable trading systems in the day which is not surprising since most of them have vested interest – they are gaining more commission.
Don’t be lured by the publicity surrounding forex day trading. You can earn money from the big trends because they provide the big income.
There are many myths surrounding day trading in Forex and here are some of them:
1. You can keep losses minimal
On the other hand, there won’t be sufficient winning trades to make up for your losses, and in the end you will end up as the loser, you won’t have time to recover your expected losses.
2. Spreads and commissions influence
Commissions and slides pile up in FOREX day trading, and influences profits and losses even more.
Suppose you win half of your trades and lose the others, this means that your day profits should be twice or thrice as big as your losses, in order to gain sufficient ground, and this is quite hard to achieve.
A system of keeping track of long term development is built on the basis of a 50-50 hit rate as the income tends to be greater than the losses.
3. FOREX day trading systems can and do put the odds in your favor
It is simply not true. The fact that people assume that they can forecast the movement of the market in such a limited time shows deficiency of knowledge.
Price of any currency is based on the following on the sum of the supply and demand and human psychology.
These factors would have to undergo long term measurement and cannot be foreseen in a short period of time.
This is due to the fact that information is not readily available to become a basis of your trading, in such a short amount of time.
Foreign exchange is all about possibilities, and an accurate measurement can be obtained in the long run as sources of data can be reliable.
Currencies develop in a long period of time, and the sufficiency of data, dependability of developments in a long term period lead to profits and have several advantages:
1. Amount of reliable facts is greater, and calculation of probability is better.
2. The gains of trade by their character is higher than day trading.
3. Commission and slippage will not greatly influence your income.
Traders trading in the day do not earn the same as those who follow developments in the long term.
In fact, long term trend followers have the advantage of the odds, who aims for the big income from big trends compared to day traders who guns for profits which is minimal by their nature and in a short span of time, which may result to losses and high transaction fees. FOREX Day trading is an ambush so don’t be fall for such publicity because the reality of it is losses.